In today's market, there are a variety of ways to make payment for goods and services. Payment can be tendered using cash currency, funds transfer between accounts, debit cards, credit cards, barter, frequent flyer miles, and prepaid cards, to name just a few methods. In the dynamic marketplace, customers might obtain vastly different goods or services for their payment.
There are many different prepaid business models in the marketplace. Conventional prepaid cards include a wide variety of financial products, including gift cards, phone cards, travel cards, flexible spending account cards, government benefit cards, subway system cards, employee incentive cards and payroll cards. These prepaid cards generally are in the form of a plastic card with a magnetic strip, bar code or embedded chip that permit the cardholders to access funds for the purchase of goods or services, much like a credit or debit card. Although prepaid cards have the appearance of credit cards and debit cards and they provide a form of cash, usually they neither involve credit nor are they tied to a cardholder's demand deposit account. Such cards are typically tied to a specified brand product or merchant service provider and have a set dollar amount or line of credit up to which the end user can spend in one or multiple uses. This form, therefore, presents the end user with concerns over price differentials between participating merchants (service provider) and increases in prices for the same goods or services. Because the card is designed for multiple-use bounded by a predefined dollar limit, the end user more often than not pays out of pocket for purchases over the dollar limit of the card, or is subject to what is commonly called a split tender transaction forcing the end user to apply multiple payment methods to complete a single transaction.